A mark in German reads “Part of the UBS group” in Basel on May 5, 2025.
Fabrice Covery AFP | Gety pictures
On Friday, the Swiss government proposed strict new capital bases that require a banking giant UBS For an additional $ 26 billion in Core Capital, following the seizure of 2023 Credit Suisse competing competition.
The measures also mean that UBS will need full benefit from its foreign units and perhaps Carry out fewer shares.
The government said in a statement on Friday, in reference to the UBS detention for the 1st Category (AT1): “The rise in continuity requirements must reach $ 26 billion in CET1 capital, to allow the AT1 bond property to reduce $ 8 billion,” in reference to the UBS contract for level 1 (AT1).
Consequently, the measures amount to an additional 26 billion dollars in the basic capital, but a condition of only $ 18 billion in the new capital. This is $ 2 billion from $ 20 billion, estimated at JP Morgan earlier this week.
UBS shares jumped 6 % after advertising.
Johann Schultz, chief stock analyst in Morningstar, indicated that the news was “bad as you will get UBS.”
Schultz said that the banking giant “can now click on some concessions and take some measures themselves to alleviate the effect, for example towards the source some of the extra capital from its subsidiaries.” He added that although negotiations will start immediately, there will be a long stage of UBS to publish measures, with their entire application in 2034.
The Swiss National Bank said it has supported measures from the government because it “will greatly enhance” UBS flexibility.
“In addition to reducing the possibility of a largely important bank, such as UBS in financial distress, this procedure also increases the bank’s room to maneuver to stabilize a crisis through its own efforts. This makes it unlikely that UBS is rescued by the government in case of crisis,” SNB said in a statement on Friday.
“Blowed to fail”
UBS is fighting with the most comply on the ghost of the capital since obtaining the second largest bank at a cut price after years of strategic errors, mismanagement and scandals in Credit Suisse.
The democratization of the banking shock also made the Swiss Financial Organization, where it is under fire due to its rare supervision of the bank and the final timing of its intervention.
Swiss organizers argue that UBS must have stronger capital requirements to protect the national economy and the financial system, given that the bank’s balance amounted to $ 1.7 trillion in 2023, which is twice the Swiss economic product expected in almost last year. UBS insists that it is not “bigger to fail” and that additional capital requirements – which are appointed to drain cash liquidity – will affect the competitiveness of the bank.
At the heart of the confrontation, it presses concerns about UBS’s ability to store any potential losses in its foreign units, as it has so far had to have 60 % of the capital with capital in the mother bank.
The higher capital requirements can reduce the bank’s public budget and provide credit by enhancing the costs of financing the lender and suffocating their readiness for lending – in addition to the decline in their appetite for risks. For shareholders, the observation will be the potential impact on the available estimated money for distribution, including profits, shares and reward payments.
“While old works at Credit Suisse end, you should liberate capital and reduce UBS costs, many of these gains can be absorbed through the tougher regulatory demands,” said Johan Schultz, an arrow analyst at Moriningstar, in a note that precedes the Venma announcement.
“Such measures may put UBS much higher capital requirements than their competitors in the United States, which leads to pressure on returns and reduce its horizons to narrow the long -term evaluation gap. Even its excellent classification for a long time for the European banking sector may evaporate recently.”
The possibility of strict Swiss capital rules and UBS presence for the United States through the World Basic Wealth Management Department is at a time when the White House trade tariff is already taught the bank’s fortunes. In dramatic development, bank She lost her crown As a continental lender in Europe the most valuable through the market value to the Spanish giant Santander in mid -April.
– Ganesh Rao of CNBC contributed to this report.
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